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Lava International may divest stake to raise $100 million

Mumbai: Lava International is looking to divest stake to raise $100 million ( 680 crore) in the next six to eight months. The company plans to run a bidding process for investors, with a clear plan in mind to do a second round of share sale in about a year after this one, said chairman Hari Om Rai. The company expects the dilution in the first tranche to be 10-15% of equity.

Industry insiders say the company had plans to raise funds through equity dilution, reported by ET in late 2014. However, by late last year, the plans were put on the back-burner.

The No. 5 smartphone player as of December 2015 quarter with 7% share as per IDC, has a capital outlay of over 2,800 crore over the next two years, spread across manufacturing facility increase worth 2,615 crore and research of 200 crore. The company that sells around 40 million mobile handsets annually, makes around 12 million a year, or a million a month in India. The rest it makes in China.

“In 2016, we will take it to 28 million from India, and by 2017, all that we sell will be from India,” Rai said. Even so, Rai said Lava has enough demand for its products that it doesn’t need to provide instruments to Reliance Industries’ Lyf brand, which has launched 4G devices under the Reliance Digital umbrella. “We are not giving our phones to Reliance or using their channel to sell our phones because they provide the same service to others,” Rai said.

The company is distributing across Sri Lanka, Bangladesh, Nepal, Pakistan, Gulf countries, Thailand, Russia, Indonesia and Mexico, he said. The company is exploring opportunities in Africa, but will wait a bit before a major marketing expansion.

“This year, we will consolidate to do more effectively and efficiently, next year, we will have a very large growth plan,” Rai said.